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74–095 2012

OVERSIGHT OF THE AMERICAN RECOVERY AND 

REINVESTMENT ACT: BROADBAND, PART 2 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS, 

TECHNOLOGY, AND THE INTERNET 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 10, 2009 

Serial No. 111–62 

( 

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 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 

(II) 


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(III) 

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 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

VITO FOSELLA, New York 

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

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

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

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

Hon. Doris O. Matsui, a Representative in Congress from the State of California, opening statement .................................................................................... 7 

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

opening statement ................................................................................................ 7 

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

California, opening statement ............................................................................. 8 

Prepared statement .......................................................................................... 10 

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

Tennessee, opening statement ............................................................................ 12 

Prepared statement .......................................................................................... 13 

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

Ohio, opening statement ...................................................................................... 14 

Hon. Donna M. Christensen, a Representative in Congress from the Virgin 

Islands, opening statement ................................................................................. 14 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 15 

Hon. G.K. Butterfield, a Representative in Congress from the State of North 

Carolina, opening statement ............................................................................... 16 

Prepared statement .......................................................................................... 18 

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

opening statement ................................................................................................ 24 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 75 

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

prepared statement .............................................................................................. 76 

WITNESSES

Lawrence E. Strickling, Assistant Secretary for Communications and Information, National Telecommunications and Information Administration ............. 25 

Prepared statement .......................................................................................... 29 

Answers to submitted questions ...................................................................... 80 

Jonathan S. Adelstein, Administrator, Rural Utilities Service ........................... 41 

Prepared statement .......................................................................................... 43 

Answers to submitted questions ...................................................................... 99 


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(1) 

OVERSIGHT OF THE AMERICAN RECOVERY 

AND REINVESTMENT ACT: BROADBAND, 

PART 2 

THURSDAY, SEPTEMBER 10, 2009 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, 

AND THE INTERNET, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:05 a.m., in Room 

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

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Boucher, Eshoo, Stupak, Inslee, Butterfield, Matsui, Christensen, Space, McNerney, Welch, 

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

and Barton (ex officio). 

Staff present: Roger Sherman, Chief Counsel, Communications, 

Technology, and the Internet; Pat Delgado, Policy Director, Communications, Technology, and the Internet; Tim Powderly, Counsel; 

Amy Levine, Counsel; Shawn Chang, Counsel; Greg Guice, FCC 

Detailee; and Matt Weiner, Special Assistant. 

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

OF VIRGINIA 

Mr. BOUCHER. Good morning to everyone. Today our sub- committee conducts a second oversight hearing regarding the $7.2 

billion provided by the Economic Recovery act for broadband programs. The Act requires that the programs be administered by the 

U.S. Department of Commerce through the NTIA and by the Department of Agriculture through the Rural Utilities Service. 

It is our pleasure this morning to welcome the NTIA director, Assistant Secretary for Communications and Information, Larry 

Strickling, and the Rural Utilities Service Administrator, Jonathan 

Adelstein, both of whom are well known to members of this subcommittee. They will discuss the process they have undertaken for 

the first round of funding and the standards that their agencies 

have developed that will govern the funding awards. 

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 the developed nations in 

the world in the percentage of the population that uses broadband. 

But the program will only be as effective as the standards that govVerDate Mar 15 2010 10:47 Aug 16, 2012 Jkt 074095 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 E:\HR\OC\A095.XXX A095

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ern the grant awards and the loans as those standards enable it 

to be. I have some concerns which I will express this morning that 

the standards that have governed the first round of funding need 

to be modified for the upcoming rounds, and I will encourage the 

agencies to consider modifying them accordingly. 

My first concern regards access to grant funding for rural applicants. In many circumstances involving very small communities 

that lack broadband, only through grant funding as distinct from 

loan funding can broadband access be achieved. While in some situations loan funding can be sufficient, for communities with very 

small populations that are isolated by mountains, the cost of building broadband can be great, and with populations of as few as 100 

homes, that cost cannot be recovered through the revenues to be 

realized from the broadband service itself. In those situations 

which are commonly found only through the award of grants can 

broadband infrastructure be built. In the RUS program, a grant of 

between 80 percent and 100 percent of project costs is only available to communities that are determined to be remote, and any 

community that is within 50 miles of a city of at least 20,000 in 

population is considered to be non-remote, disqualifying that community from receiving grants of more than 50 percent under the 

RUS program. Almost the entire eastern United States is disqualified from the 80 percent to 100 percent grants by what I think is 

a very inappropriate standard, and in mountainous terrain, the 

standard of being within 50 miles or something less than 50 miles 

of a city of 20,000 is not a reasonable yardstick for determining 

need. In Virginia, in West Virginia and in other States in the Appalachian region, hundreds of communities in isolated mountain 

valleys may be within only a few miles of a city but because of the 

high cost of building the fiber optics or wireless links in those challenging topographies, and given the very small size of the population to be served, only through grants of 80 percent or more of 

a project cost can these communities receive broadband. The previously existing RUS Community Connect program is well suited to 

the need that I have described but that program is very small with 

only $13 million having been available for grants on a nationwide 

basis in one recent year. I would urge that in round 2, the definition of ‘‘remote’’ be changed to qualify more truly isolated communities that may be close to a city. In the circumstances I have described, that proximity is functionally irrelevant. 

My second concern is that for rural applicants to be considered 

for the NTIA program, which has more flexible rules for making 

grants of 80 percent to 100 percent, the application must first go 

to RUS and be rejected by RUS before NTIA can make an award 

to that applicant. As a practical matter, I wonder if by the time 

RUS has reviewed and rejected an application as not qualified 

under RUS rules, if there is time remaining within that funding 

cycle for NTIA to review the application and consider it on an 

equal footing with applications that are initially directed to NTIA, 

and in the next funding round I hope that you will consider allowing applicants to designate the funding agency that will be primary 

for purposes of considering an applicant’s application. 

My third concern relates to the standards that are used to determine areas that are underserved. They appear to be highly restricVerDate Mar 15 2010 10:47 Aug 16, 2012 Jkt 074095 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 E:\HR\OC\A095.XXX A095

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tive. One of three standards would have to be satisfied for an area 

to be deemed underserved. The first of these is that no more than 

50 percent of homes could have a broadband connection greater 

than 768 kilobits per second. That is a very slow data rate that 

many would not consider to be true broadband. A speed of at least 

1.5 megabits per second might be more appropriate. A second 

standard that independently could qualify an application for underserved funding is that no provider advertises download speeds of 

at least 3 megabits per second in the area, but I would suggest that 

advertising is not a truly reliable measure of genuine broadband 

availability since advertised speeds frequently exceed the real data 

rate that subscribers receive. The third standard is that the rate 

for household subscribership is 40 percent or less in areas that 

have broadband. The national take rate, I would note, is 55 percent, and we are told that few places where broadband is found 

have take rates of 40 percent or less, and so I am concerned that 

these standards will result in many communities finding that the 

program is less helpful to them than we intended for it to be. 

My final concern is that apparently the States have been handed 

NTIA’s entire basket of applications for initial review. We intended 

for NTIA to have final decision making over its applications, and 

I am looking for assurance that NTIA in fact will have that final 

decision making. We have recently heard, in our case, from the 

State of Virginia, that they were somewhat surprised to have received the entire group of applications directed to NTIA from Virginians and had anticipated only receiving a selected group of applications that had been prescreened through NTIA, and frankly, 

the State doesn’t feel prepared to undertake that challenge and so 

I would appreciate your response as to why that happened and also 

some suggestion that we are looking for that you are going to retain final decision making with regard to these. 

I have exceeded my time rather substantially and the Chair intends to be very generous with other members who want to express 

their concerns or make their comments with regard to these matters. 

Mr. BOUCHER. The gentleman from Florida, the ranking Republican on our subcommittee, Mr. Stearns, is recognized for his opening statement. 

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

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

thank you for holding this hearing, and let me first of all congratulate Secretary Strickling on his confirmation as Commerce Assistant Secretary for Communications and Information. I believe this 

is your first opportunity to testify, so welcome. I also want to welcome Administrator Adelstein, who has testified before this committee before, in fact a number of times in different roles, so you 

are to be commended for being adaptable. From broadband deployment to spectrum policy, both of you certainly will have your hands 

full, and I appreciate your public service here. 

These issues are of tremendous importance to the telecommunications sector, and in fact, when you talk about that sector, you are 

talking about the entire economy. The American Recovery and ReVerDate Mar 15 2010 10:47 Aug 16, 2012 Jkt 074095 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 E:\HR\OC\A095.XXX A095

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investment Act of 2009 provides a total of $7.2 billion for 

broadband, $2.5 billion of which will go to the Rural Utilities Service and the remaining $4.7 billion will go to the National Telecommunications and Information Administration. In addition, the 

Federal Communications Commission will consult with the NTIA 

and RUS and develop a national broadband strategy. Making sure 

these programs are administered fairly, efficiently and transparently is one of their top priorities and my top priority also. All 

of us agree that broadband has the opportunity to transform everyday lives from how we work, how we receive medical information, 

telemedicine in the future and how we are entertained. What is 

needed, my colleagues, is a long-term investment in broadband infrastructure that is based upon free market principles and not just 

a government-run and operated system. We have a remarkable opportunity to start another technological revolution, and I hope we 

don’t squander this opportunity. 

So I applaud the folks on this type of transformational infrastructure. This can be only transformational if done right and provides enormous long-term economic benefit. Unfortunately, the 

haste, I believe, with which the stimulus package was drafted and 

enacted and the very short time frame it gives the NTIA and RUS 

to implement the program creates sort of a risk in my mind that 

taxpayers’ dollars will not be used effectively. Dispensing this sort 

of money, this amount of money entrusted to the NTIA and the 

RUS in a manner that is fair and efficient, that will be a significant challenge to both of you gentlemen. We are going to have to 

commit ourselves to vigorous oversight and so, Mr. Chairman, I 

recommend at a later time we do have further hearings to look into 

oversight, how much of this huge billions and billions of dollars 

that are going to be going out in a short amount of time, how it 

is being used to ensure that the NTIA and the RUS would 

prioritize grants and States that have completed broadband maps 

so that we know that the grants are well targeted. This can also 

help to ensure that requests are made and provide a valuable incentive to complete maps in the remaining States as thoroughly 

and quickly as possible. In fact, I believe that no money should be 

spent until mapping is complete and the FCC broadband plan is 

finished, which I think will be early next year. This national 

broadband plan will set forth goals and policies on how to best improve broadband access, so it just makes sense that we should 

know where to spend the money before it is actually spent, and 

why not have these studies complete first. 

In addition, the NTIA and the RUS should prioritize grants in 

unserved areas before underserved areas. We should ensure that 

everyone gets firsts before others are allowed to seconds and thirds. 

Allocating funds to underserved areas first could distort the marketplace because companies will be forced to compete with government-subsidized competitors. This will also spread the subscriber 

base thin in what is already a difficult market to serve, providing 

each company with even less revenue to upgrade their facilities. 

And finally, the funds should be targeted to projects that demonstrate they can exist without government continued subsidizing 

into the future so that in 3 to 4 years we do not need to have them 

come back and say we need a bailout because we cannot meet our 


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continued development. The NTIA and the RUS should not be in 

the business of funding projects that will impose new and expansive demands on the Universal Service Fund tomorrow. How they 

recognize these projects will be a difficult task. 

I am also concerned about the use of the stimulus funding process to expand on the FCC broadband policy statement obligations. 

I have been a skeptic of net neutrality, and these obligations strike 

me as another unjustified step down the slippery slope towards 

regulation of the Internet. I doubt that these non-discrimination 

rules will benefit consumers, expand broadband adoption or drive 

network availability in areas that simply lack broadband access. I 

fail to see how the imposition of these obligations dovetail with the 

rationale for the stimulus package in the first place, the near-term 

creation of jobs. If done right, we have a tremendous opportunity 

to boost our economy and transform the way we live but if we 

throw money indiscriminately at the problem only to say we are 

doing something, I don’t think we will accomplish our long-term 

economic goals and also will not provide broadband investment the 

best means of deployment. 

So we cannot let this opportunity pass. I welcome this hearing, 

and Mr. Chairman, I look forward to further discussions and talking to our witnesses. Thank you. 

Mr. BOUCHER. Thank you very much, Mr. Stearns, and let me assure you that we will be having further hearings on the broadband 

stimulus program. 

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, and thank you for holding this second oversight hearing on the American Recovery and 

Reinvestment Act. Welcome, Mr. Strickling and Mr. Adelstein, to 

our committee. I look forward to your testimony today. 

I also wish to thank John Morabito with the NTIA along with 

John Claffee and Jessica Sufilo with the RUS for speaking at our 

rural caucus staff briefing on the stimulus package that we hosted 

in July. It was great help to us all of us and to our staffs. 

Broadband access is of high interest for rural communities that 

wish to be part of today’s 21st century economy. This interest was 

demonstrated in real numbers when 2,200 entities filed applications to link 28 billion in requests with the Departments of Commerce and Agriculture for broadband grants and loans this August. 

A quick search on Broadband USA shows northern Michigan alone 

accounts for 54 of these applicants, totaling more than $100 million 

in requests in middle mile, last mile and remote projects. Of 

course, these numbers far exceed the actual amount Congress appropriated towards expanding broadband access but we all knew 

that the demand would outpace the funding. The Broadband Technology Opportunities Program and the Broadband Initiative Program represent opportunities for the federal government to demonstrate that the American Recovery and Reinvestment Act can 

permanently improve the quality of life for rural communities. 


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Now, that is not to say that the funding distributed so far has 

not been a necessary investment in our rural infrastructure, but at 

the end of the day, it is access to broadband that will make rural 

America’s economy competitive for years to come. That leaves an 

enormous challenge for our witnesses and the agencies they represent. There is a lot of questions on how the applications will be 

handled and what mechanisms will be put in place to ensure the 

public money is distributed fairly. I look forward to hearing from 

our witnesses today. 

Thank you, Mr. Chairman, for holding this hearing. I yield back 

the last 7 seconds. 

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

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. How generous of Mr. 

Stupak with those 7 seconds. I will try to be as courageous and 

bold. 

I want to thank you for the hearing and also for Ranking Member Stearns. You know, we are spending and plan to spend a huge 

chunk of taxpayers’ dollars and actually increase indebtedness for 

this program, and this oversight hearing and the next oversight 

hearings that the chairman has promised are very, very important 

in this process. As an opponent of the stimulus bill, I am receptive 

to being proved wrong in certain areas. During the district work 

period, I went to Carlyle Lake, a Corps of Engineers lake, and really 50 percent of their backlog of unmet needs are being filled by 

some stimulus dollars. So where I still would have voted no, I am 

willing to say there are some positive things that might be going 

on and highlight that. 

So that is the importance of the oversight, to really make sure 

that taxpayers’ indebtedness, there is a good return on that, and 

that is the importance of the job that you all are doing. When we 

had our first oversight hearing, we had the California Public Utilities commissioner here, and the question I posed, which I think is 

already kind of precedent based upon some of the comments have 

been made is, she testified that they would have spent money poorly had they not had done broadband mapping first, and so I would 

like to encourage that. I would not go as far as the ranking member of this committee saying no money should be doled out before 

that but I do think that those areas that have done broadband 

mapping and have already invested should also be taken into consideration when we look at where this money should go. Connect 

Southern Illinois has been trying to do that in southern Illinois. 

That is modeled after the Kentucky program. We have had numerous hearings on that. I would hope that that would be taken into 

consideration. And Commissioner Adelstein, we talked prior to the 

hearing about 911 and PSAPs. That is my part of my opening comment. The public safety aspect of this is really critical as we look 

at the importance of the broadband delivery system to emergency 

services communications. And, you know, in rural parts of the 

country, they just are not at the point of major metropolitan areas. 


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And so I did not live up to Bart Stupak’s time commitment. I 

apologize, and I yield back my time, Mr. Chairman. Thank you. 

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

The gentlelady from California, Ms. Matsui, is recognized for 2 

minutes. 

OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. MATSUI. Thank you, Mr. Chairman, and thank you very 

much for your leadership on this very important issue and for calling the second hearing. I would also like to thank Mr. Strickling 

and Mr. Adelstein for being with us here today and I look forward 

to your testimonies. 

We are here today to examine the efforts of NTIA and RUS in 

carrying out the broadband programs established by the Recovery 

Act. The broadband package included a $7.2 billion investment in 

our Nation’s broadband system. This investment will help expand 

broadband access to more and more Americans across the Nation. 

I am particularly interested to hear how the broadband program is 

helping households, schools, libraries, health facilities, among others, in urban underserved communities to achieve greater access to 

broadband services. In the current economic climate, more and 

more hardworking families need access to the Internet to find a 

new job, manage their finances during this difficult period, obtain 

news alerts, apply to college. The broadband stimulus package will 

help build out the infrastructure to many more communities 

throughout this Nation. Moving forward, I believe it is critically 

important that we address affordability of Internet access for all. 

In doing so, it would truly help close the digital divide for millions 

of Americans, and that is why I will soon be introducing legislation 

that will expand the Universal Service Fund’s Lifeline Assistance 

program for universal broadband adoption. The legislation will help 

more lower income Americans living in urban and rural areas with 

assistance in subscribing to affordable broadband services. 

I thank you, Mr. Chairman, for holding this very important hearing today and I yield back the balance of my time. 

Mr. BOUCHER. Thank you, Ms. Matsui. 

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. Gentlemen, thank you for 

being here today. 

I am concerned that the goal of improving the broadband access 

to those Americans without it today was not fulfilled in this first 

round of stimulus problems funding. During the passage of the 

stimulus bill, the minority was assured that telecommunications 

carriers serving rural America would have access to stimulus dollars to deploy networks to their unserved customers throughout the 

RUS. Somewhere between passage and the RUS and the NTIA releasing the rules for the first round of most of rural unserved 

America was left out. What we have today are rules that prohibit 


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an applicant from receiving anything higher than 50 percent grant 

to serve a remote area. By definition, a remote area is a 50-mile 

radius from a population center of 20,000 or more. I am not sure 

if it was the intent to exclude most of rural America but that is 

exactly what happened. In Nebraska, you may have to drive a couple hundred miles to find a town that big. As a result of the ‘‘remote’’ definition coupled with the burdensome regulation on the 

network, the three largest carriers in Nebraska decided not to 

apply for stimulus broadband money. If the carriers that were 

shovel-ready are not willing to apply, then I am concerned that the 

NTIA and RUS may award money to applicants who do not have 

the expertise or business to sustain networks in rural high-cost 

America. 

I want to associate myself with the chairman’s remarks, particularly about the speed, and hope to learn in today’s hearing more 

about how the applications will meet America’s remote areas and 

rural needs. 

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

The chairman of the full 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 

timely hearing. I want to welcome Assistant Secretary Strickling, 

who is appearing before our committee for the first time as the administrator of the National Telecommunications and Information 

Administration, NTIA, as well as Jonathan Adelstein, who left the 

Federal Communications Commission after 7 years of service as a 

commissioner to lead the Rural Utilities Service. I welcome you 

both. I also want to congratulate both of you on your recent confirmations and we look forward to working with you. 

As you are well aware, the overriding purpose of the American 

Recovery and Reinvestment Act of 2009 was to stimulate the economy by creating and preserving jobs. NTIA and RUS deserve high 

praise for issuing the initial application guidelines in a timely fashion while incorporating enhanced transparency and accountability 

measures, and I am pleased that the Notice of Fund Availability 

broadly reflects the objectives of the Recovery Act in stimulating 

the economy, creating and saving jobs and extending broadband to 

hard-to-reach and underserved communities. You and your staffs 

have worked around the clock to get the program up and running 

so that Recovery Act funds might have an immediate impact, and 

thank you for your ongoing efforts. 

There are many skeptics who said you could not get it done and 

there were those who said that Congress placed so many conditions 

on these funds, there would be too few applicants to make this effort worthwhile. Contrary to these fears, the response to the NOFA 

has been overwhelming. It is clear that the public interest obligations that attach to this public money have not deterred interest 

or innovation, and it is clear that with 2,200 applications seeking 

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communications and technology sector in providing all of our citizens with access to advanced broadband networks. I am confident 

that broadband stimulus funds will lead to new and innovative offerings that benefit our Nation. 

While we understand that your work is just beginning, now that 

you have established the framework for releasing these funds, you 

must make certain they are released wisely, transparently and efficiently. I think most members of this committee and the American 

public recognize that this overall program is an unprecedented endeavor in scope and speed. We understand that you will want to 

refine certain details to improve performance and maximize the 

benefits of the public’s investment in these efforts, and I know you 

will be interested in receiving constructive suggestions from both 

sides of the aisle. 

I look to hearing your testimony and I thank you for being here 

today and I thank the chairman for convening the hearing. 

[The prepared statement of Mr. Waxman follows:] 


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

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. I want to welcome 

both of you. Mr. Adelstein, it is going to be a pleasure to continue 

our ongoing conversation about broadband and intellectual property. Mr. Strickling, congratulations. I have enjoyed my visit with 

you and look forward to more. I think all of you know that I am 

very concerned about broadband and the effect that that has on my 

constituents in Tennessee’s 7th Congressional District and I am 

also going to look forward to hearing from you all not only about 

how we go about with that broadband deployment and the program 

that is before us and the oversight we need to do on this, addressing the applications, addressing spectrum relocation, how to best 

achieve our shared goal of universal access, and the development 

of a broadband map, the use of those maps. There are all topics 

that you have heard from others. 

This morning I do want to touch on one thing I don’t think anyone has touched on, and that is non-discrimination in Internet content, and I support the policy goal of ensuring that all Americans 

do have access to broadband. Universal broadband access can 

greatly increase economic opportunity for all Americans. Indeed, 

many times we have talked about the need for this in the rural 

part of my district. They look at economic jobs recruitment and retention. So it is important not only to me but to all of us. The 

Internet, though, should not—it is not and should not be neutral 

with respect to unlawful content. I fear that misguided non-discrimination regulations that fail to distinguish between legal and 

illegal content would undermine broadband adoption. 

So I know I am out of time but I do want to highlight that with 

you all. I am also going to want to look at how you spend the $7 

billion in the broadband stimulus funds, where that is going to go, 

how those are going to be vetted, how we are going to go about vetting those applications. I have got a couple of concerns that I want 

to highlight on that. 

Thank you, Mr. Chairman. I look forward to the discussion. 

[The prepared statement of Mrs. Blackburn follows:] 


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

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, Chairman Boucher and Ranking Member 

Stearns and to our witnesses today. Assistant Secretary Strickling 

and Mr. Adelstein, thank you for taking the time out of your busy 

schedules to be here and I would like to congratulate you both on 

your recent appointments. 

The task Congress presented to NTIA and RUS at the beginning 

of the year was daunting. I commend both of your teams for taking 

on the challenges of the statute and implementing a number of innovative approaches. Streamlining the application process to eliminate duplicity and promote efficiency in time and resources seems 

to have warranted praise from many sectors, and the efforts you 

have taken in holding public forums and workshops are to be commended as well. Furthermore, I hope that your commitment to 

transparency remains as we move ahead. 

I do believe that following the completion of the first round of 

funding, there is some room for improvement. Fortunately, the 

process is structured to allow for such changes to be made before 

progressing with the second round of funding. Specifically, I am 

concerned that the RUS’s definition of ‘‘remote’’ may exclude regions of the country very worthy of seeing those Recovery Act dollars. The State of Ohio in particular remains essentially ineligible 

for these funds, and I think some of my constituents in Appalachia 

would argue that they live in truly remote areas. I do look to forward to working with you both as part of this ongoing process, and 

of course, I share your support for providing broadband access and 

the seemingly infinite benefits that such access affords to all Americans. 

Thank you, and I yield back my time. 

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

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

OPENING STATEMENT OF HON. DONNA M. CHRISTENSEN, A 

REPRESENTATIVE IN CONGRESS FROM THE VIRGIN ISLANDS 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman, and thank you for 

holding this hearing. You know, when it came to deciding my second subcommittee, I was torn, but your leadership, Mr. Chairman, 

and the importance of the work of this subcommittee to, as the 

President said last night, not just dealing with crisis but to building a future, has reaffirmed that I made a good choice, the right 

choice. 

I also want to welcome Assistant Secretary Strickling and Administrator Adelstein this morning. I am not going to use my opening remarks to lay out concerns. I will get to some of those in the 

questioning period, but I share some of them that have already 

been expressed. Today I just want to commend both agencies for 

the way you have worked together and have reached across the 

country and for your commitment to simplifying the process, to 


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bringing broadband to every person in this country and to using 

the federal dollars that have been entrusted to you efficiently, effectively and responsible. 

The U.S. Virgin Islands and I have had a long relationship with 

RUS and so I know of your long experience in carrying out technology across the country, and we appreciate not only that you 

don’t forget us but that you always include the territories, and we 

applaud your ability to have leverage of $2.5 billion to over $7 billion. NTIA, when you were here before, you convinced me that you 

were not only aware of the territories but embraced the fact that 

your responsibility extended to us, and being a representative both 

in my district and as a racial minority of those who are referred 

to in your testimony and your priorities as our most vulnerable 

populations, I applaud the goal to close the broadband gap and 

bring maximum broadband benefits to communities that are often 

left out and left behind. 

Speaking on behalf of my own and other providers, we also appreciate that stimulating broadband demand is also one of the priorities, so I look forward to the discussion after your presentations. 

I know the devil is in the details, but thank you once again for 

your aggressive approach to building for our future. 

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

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

2 minutes. 

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

you for your leadership on this issue, and especially holding this 

hearing this morning. I want to thank Mr. Strickling and Mr. 

Adelstein for your work in developing the definitions and putting 

together a framework for releasing the funds. I understand that a 

large number of applications have been received, far larger than 

what was predicted, and so it is critically important that we distribute those monies in a way that creates jobs and improves 

broadband service throughout the country. 

So with that in mind, I look forward to working with you all to 

make sure that we meet those goals, and with that, I just yield 

back the balance of my time. 

Mr. BOUCHER. Thank you, Mr. McNerney. 

The gentlelady from California, Ms. Eshoo, is recognized for 2 

minutes. 

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

Ms. ESHOO. Thank you, Mr. Chairman. It is great to be back, and 

I want to welcome the two outstanding people that are here today, 

Assistant Secretary Strickling and, of course, the new administrator, Jonathan Adelstein. It is wonderful to see you in your new 

position, and I congratulate you. 

I am really pleased that we have this opportunity to talk not 

only about your roles in the broadband stimulus program, because 

we are really depending on you on both, NTIA and the RUS, to ensure that the recovery funds really spur growth and speed economic recovery in our country. It is why the language and the dollars were placed in that very large package, and I think one of the 


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most important parts of it. So I know that you are going to work 

hard to meet these priorities. 

Assistant Secretary Strickland—Strickling. We had a Strickland 

on our committee so I am sorry for the slip of tongue. You have 

taken over NTIA at a time when it is really shifting gears and readjusting its priorities. You have gone from handing out DTV coupons to reviewing broadband applications in the space of a few 

weeks, so that is a big shift, and we want to see you prosper in 

this. In May of this year, Representative Markey and I wrote to 

Secretary Lock and Secretary Vilsack to urge the prioritization of 

broadband projects under the Recovery Act based on advanced capabilities and speeds. Improved access to distance learning, telemedicine, economic growth and job creation are dependent upon 

network construction that delivers capacity for high-bandwidth applications. We don’t want to start out moving like a turtle. When 

this is implemented, we want it at the highest speeds possible. 

That is really how we are going to define success, in my view, anyway. The recovery funds should go toward this goal as well as 

projects aimed at unserved areas. 

I know that the first round of applications brought forward some 

complaints from software breakdowns to onerous application questions that might reveal proprietary information. There are concerns 

that the program doesn’t encourage higher speeds in underserved 

markets or spur anchor institutions but focuses instead on lower 

speeds in rural regions. Rural regions should not be subjected to 

lower speeds, period. This is the United States of America. I think 

we should have the highest standards and the highest speeds 

across the entire country. Just because they are rural should not 

equate to low speeds. Thankfully, we are only in the first round of 

the process and the funds remain available to achieve all of 

Congress’s priorities and goals. I hope you have a plan to encourage projects that utilize the most advanced highest bandwidth. I 

also hope you have a plan for addressing concerns about the application process and improving it during the next round. 

So again, thank you for taking on the jobs that you have. I am 

sure that we are going to be working closely with one another and 

tracking this because it really is so important for the future of our 

country. So congratulations again and I look forward to not only 

working with you but also questioning you as well. Thank you, Mr. 

Chairman. 

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

The gentleman from North Carolina, Mr. Butterfield, is recognized for 2 minutes. 

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

CAROLINA 

Mr. BUTTERFIELD. Thank you, Mr. Chairman. 

Mr. Chairman, thank you for holding the second part of this very 

important hearing. This is an opportunity to hear testimony from 

Mr. Strickling as well as Administrator Adelstein. I want to sincerely congratulate both of you for your respective appointments 

and I certainly look forward to working with you to better serve the 

people of my state, which is the state of North Carolina, the 1st 


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Congressional District. My district is a rural district. In fact, we 

have the fourth poorest district among the Congressional districts 

in the country. As you know, $3.8 billion was made available through the first 

of two Notices of Funds Availability for broadband deployment 

across the United States, and these are critically important funds 

needed to help ensure that our struggling communities are able to 

join the global economy. America’s unserved and underserved communities are decades behind our technologically advanced areas of 

the country. I know because I represent many of these communities. Access to broadband is something many of us take for granted yet it is still out of reach for nearly half of all U.S. households. 

We have a responsibility to make certain that funding for 

broadband deployment be distributed to those communities with 

the greatest need. It is vitally important that these funds be distributed quickly and efficiently so that access to broadband technology will be realized throughout the country. Last January, during the full committee markup, I strongly advocated for Congress, 

not NTIA, to have the discretion to define unserved and underserved. While NTIA’s definitions do identify a number of needed 

communities, many deserving communities are still being left behind. 

While broadband access may be available to just over 40 percent 

of households, it is certainly not affordable for low-income populations, and this is the situation in my hometown of Wilson, North 

Carolina. Since 2008, through a public effort, my city has spent $30 

million in an effort to provide broadband service to every household. The city has been proactive in deploying broadband to households and aims to provide broadband services at reduced cost to 

every home within the city. While this city of Wilson is partially 

served by high-priced broadband service providers, the city’s service called Green Light provides a fiber to home alternative. Unfortunately, without additional assistance, the city will be unable to 

continue to deploy affordable broadband access to low-income sections of the city. 

Mr. Chairman, I see that my time is expired. I ask unanimous 

consent that the entire statement be included in the record. 

[The prepared statement of Mr. Butterfield follows:] 


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Mr. BOUCHER. Without objection, and the Chair thanks the gentleman for his comments, and we welcome now our witnesses for 

this morning, and I want to add my voice to those of the subcommittee—oh, I am sorry. I did not see Mr. Barton arrive, so my 

welcome to you will have to be postponed. At this time I am 

pleased to recognize the ranking member of the full Energy and 

Commerce Committee, the gentleman from Texas, Mr. Barton. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Mr. Chairman, normally I wouldn’t interrupt but 

my staff’s feelings are going to be hurt if I don’t read at least some 

of their excellent opening statement. 

Let me thank you, Mr. Chairman, for calling this hearing. Let 

me welcome Assistant Commerce Secretary Strickling and congratulate him on his recent appointment, and to our other witness, 

you have a new job now. I am used to seeing you as the FCC commissioner and now you have moved over, so we are glad that you 

are here. 

I am glad we got the DTV transition behind us, Mr. Chairman. 

You know, all of those worries of Armageddon turned out not to be 

true. The biggest problem was that I never got around to asking 

for a coupon so I still have television sets that are inoperable, and 

it is the Congress’s fault, you know. But I am going to take it up 

with my Congressman at the appropriate time with the appropriate 

letter of strong condemnation. 

Let us simply say that in terms of broadband implementation, 

my staff indicates that over 2,000 requests have been received for 

$28 billion. That is four times the amount of money that the Congress has allotted, so let me tell you two gentlemen, as long as you 

fund the applications in my Congressional district, we won’t have 

a lot of problems, and I guess Mr. Boucher and Mr. Shimkus and 

Mr. Terry, I am looking on the other side, my friends over there, 

you know, fund the ones that are here in attendance when the 

gavel sounds and we will be OK. 

We do think that projects should be prioritized where the mapping is already complete. There is nothing in the statute that 

would prevent you from taking that. My understanding is that 

maps have been completed in at least 10 States and there are 10 

other States where they almost completed. This is an opinion and 

not necessarily a fact, but I believe that there should be some 

prioritization for areas that are totally unserved as opposed to underserved because underserved is in the eyes of the beholder but 

unserved is unserved and there is no—you know, that is an either/ 

or digital decision. They either have service or they don’t. 

I guess with that, Mr. Chairman, I will yield back and submit 

my formal statement for the record, but again, I welcome our two 

witnesses and we look forward to hearing your testimony. Thank 

you, Mr. Chairman. 

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

And now I am pleased to welcome our two witnesses and congratulate both of them upon their appointments to head their respective agencies. This subcommittee is very familiar with both of 

these gentlemen, who have appeared before us previously. Mr. 


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Strickling was at one time head of the common carrier bureau at 

the FCC, and Mr. Adelstein for a number of years served as a commissioner at the FCC, and I would say that both of these agencies 

are certainly fortunate to have your services as is the United 

States government. 

Mr. Strickling is now the assistant secretary for communications 

and information of NTIA. Mr. Adelstein is the administrator for the 

Rural Utilities Service at the U.S. Department of Agriculture, and 

I want to commend both of you for the way in which you have coordinated your work as the standards for making grants and loans 

under the broadband program have been developed. I think it is 

commendable that you have worked together this well and that you 

have a seamless program for all intents and purposes. I think that 

serves our purposes in terms of making sure the program is effective and I commend you for that coordination that you have undertaken. 

Without objection, your prepared written statements will be 

made a part of the record and we would welcome your oral presentation of approximately 5 minutes. Mr. Strickling, we will be 

pleased to begin with you. 

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

STATEMENT OF LAWRENCE E. STRICKLING 

Mr. STRICKLING. Thank you very much, Chairman Boucher and 

Ranking Members Stearns and Barton. I want to thank all of you 

for the invitation to testify today on behalf of the NTIA on the implementation of the Broadband Technology Opportunities Program 

and the development of the national broadband map as set forth 

in the Recovery Act. I welcome this opportunity to come before you 

early in my tenure as assistant secretary to begin this dialog in collaboration on our shared priorities of fostering innovation and 

growth in the communications and information sectors and ensuring that all of our citizens are able to participate in today’s Information Age. I am also very pleased to appear here today with Jonathan Adelstein, who oversees the Broadband Initiatives Program at 

the U.S. Department of Agriculture. Our two agencies, as has been 

noted, have worked hand in hand the last several months to implement the broadband provisions of the Recovery Act, and the result 

has been a highly coordinated and well thought out approach that 

takes advantage of the individual expertise of the two agencies. 

The message we bring to you today is that we have put our programs in place. We have receiving an overwhelming response to 

our initial round of funding and we look forward to the challenge 

of awarding grants later this fall to a diverse set of grant recipients. I want to assure you that these funds will be well spent. We 

expect to leverage these programs into significant and lasting improvements in America’s technological innovation and economic 

health, which will allow us to take a significant step forward to 


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achieve President Obama’s vision of bringing the benefits of 

broadband to all Americans. 

Today we are in the thick of reviewing the initial applications we 

received in late August. Between our two agencies, we received 

over 2,200 applications requesting nearly $28 billion in funding, 

which was seven times the funding available in the first round. 

When we include the over $10 billion in matching funds that our 

applicants have committed, these applications represent more than 

$38 billion in proposed broadband projects. At least one application 

was filed for each State, each territory and the District of Columbia. The applicant pool is diverse and includes States, tribal nations, local governments, nonprofit organizations, telephone, cable 

and wireless companies and anchor institutions such as schools, libraries and hospitals. I am very encouraged by this extremely high 

interest level shown by the applicants in our first round and I urge 

all of you to take a look at our Web site, BroadbandUSA.gov, which 

is now up and running with a searchable database containing descriptions of all the applications we have received. Soon we will be 

posting the maps of the geographical areas of coverage proposed by 

our first round applicants. 

In our evaluation of these applications, first at least three expert 

reviewers will grade each application against established criteria 

including the proposed project’s purpose, benefits, viability and sustainability. These reviewers have been selected based on their expertise and background and we are carefully screening them for 

any actual or apparent conflicts of interest. The reviewer’s scores 

for each application will be averaged and those applications considered the most highly qualified will advance for further consideration. Mr. Chairman, you made a comment raising a concern about 

the sequencing of our review, and I want to assure you that we are 

going to be looking at all of the applications that we have received 

and will not be waiting to review the joint applications submitted 

to both of our agencies until the Department of Agriculture has 

completed its review, so everything will be looked at in sequence 

without any delay. 

Each State and territory will be given the opportunity to 

prioritize and comment on the applications relevant to its jurisdiction. Again to clear up any misconception, the States are not reviewing the applications in lieu of the reviews that we are conducting, and as always we retain the decision as to which grants 

will be awarded. However, the Act does recognize that State and 

territorial officials have a unique perspective on broadband needs 

within their jurisdictions, and we look forward to their input. 

For those applications that merit further consideration, we will 

engage in additional due diligence, which will include our requesting supplementary information from applicants. NTIA staff will review and analyze this information and prepare recommendations 

as to which projects should be funded. Those recommendations will 

be presented to me and I will make the final selections consistent 

with the statutory directives established in the Recovery Act. We 

expect to begin announcing grant awards in November and hope to 

complete the first round of awards by the end of the year. 

I would also like to update the subcommittee on our progress to 

develop the national broadband map. Under the State broadband 


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data and development grant program for which Congress appropriated $350 million, I am pleased to report that we received an 

application from every State, territory and the District of Columbia. We will also be awarding grants to States to support their own 

planning efforts for broadband just as the Recovery Act allows. 

With respect to those planning grants, 52 applicants requested a 

total of $26 million in funding for that planning project. As with 

the broadband grants, there will be review by technical experts followed by a second review performed by our own staff. We hope to 

award a broadband mapping grant to every State and if necessary 

we will work with the States to revise and refine their proposals 

so that each proposal meets our standards. We expect to announce 

the first mapping awards by the end of September. We expect to 

receive a substantially complete set of State-level availability data 

by November followed by a complete verified set of all requested 

data by next spring. We will complete that map by February 2011 

as required by the Recovery Act. 

Even in the middle of all this activity to review the broadband 

applications and the mapping applications, we are constantly 

thinking about ways to improve the program. For example, our experience with this first round is leading both of our agencies jointly 

to explore the option of holding just one more round of funding. 

This may have the potential of yielding benefits for all stakeholders. First, it would enable us to complete the entire grant-making process in the summer of 2010 as opposed to next September, 

and expedite the stimulative benefits for the economy and job creation that the Recovery Act promises. Combining the second and 

third rounds into a single funding round would also allow us to adjust the next application deadline, giving additional time first to 

the stakeholders to provide us their views as to how the first round 

worked for them and to our agencies so we can learn from our experience and adjust those aspects of the process that need to be improved. Finally, combining the two rounds may also save administrative expenses. 

With respect to the mapping program, we announced yesterday 

that we will initially fund the State data collection efforts for a 2- 

year period as opposed to the 5-year period originally contemplated. 

Again, this approach allows us to assess lessons learned, determine 

best practices and investigate opportunities for improved data collection methods prior to awarding funds for subsequent years. 

Based on what we have received, we expect that the funding for 

2 years will cost approximately $100 million, far less than the $350 

million appropriated by Congress, and in no way will this change 

affect our ability to publish a comprehensive map by the February 

deadline. 

For both the broadband grants and the mapping grants, we are 

devoting substantial efforts to meeting our oversight obligations for 

the program. We are committed to ensuring that taxpayers’ money 

is spent wisely and efficiently. Since the passage of the Act, we 

have been working with the Department of Commerce’s inspector 

general to design the program in a manner that minimizes the risk 

of waste, fraud and abuse. Just last week we met with the inspector general’s office to kick off its audit of the program as called for 

in the Recovery Act. As we move forward and begin to make 


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awards, we will ramp up our auditing and monitoring responsibilities including site visits to grantees. We are working extremely 

hard to ensure that the projects funded by the Recovery Act serve 

as valuable inputs to our long-term broadband strategy. I look forward to working with all of you in the months ahead to ensure that 

the Nation’s policies benefit our communications and information 

industries and American consumers. 

Thank you again for the opportunity to testify, and I look forward to answering your questions. 

[The prepared statement of Mr. Strickling follows:] 


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

Mr. Adelstein. 

STATEMENT OF JONATHAN ADELSTEIN 

Mr. ADELSTEIN. Thank you, Mr. Chairman, Ranking Member 

Stearns, Ranking Member Barton and members of the subcommittee, and thank you for inviting me back to testify. Mr. 

Chairman, I especially appreciate your longstanding leadership in 

support of our mission to serve rural America. In my previous capacity in the FCC, I worked closely with many of you to promote 

broadband against America in rural areas as well. Increasing 

broadband deployment and adoption rates in rural areas is a top 

priority for President Obama, for USDA Secretary Vilsack and all 

of us at RUS. I know it is for the subcommittee and for this Congress as well. It is a special honor to appear with my good friend, 

Larry Strickling, who has done such an outstanding job of leading 

the NTIA through this period. Our challenge is clear. Broadband 

continues to lag in America and it continues to lag in rural America, and we can’t allow this to continue. 

A recent USDA study that we provided to the committee documented how rural communities with access to broadband create 

more jobs and have higher earnings. Those which lag are economically handicapped. You have given us an historic opportunity 

through the Recovery Act to address this challenge and at the same 

time provide urgently needed stimulus to our economy. RUS has 

long and highly successful experience since its beginnings as the 

Rural Electrification Administration in 1935 in the deployment of 

electric, telephone and water service in rural areas. We are now applying this expertise to a newer technology, to broadband. We have 

been on the cutting edge. Since 1995, we have required all new 

telecommunications capacity that we finance to be broadband capable. We have also had great success with our Community Connect 

and distance learning and telemedicine programs. The USDA 

broadband loan program created by the 2002 Farm Bill has provided over $1.1 billion in loans to more than 90 broadband projects 

in rural communities spanning 42 States, so we have got experience. 

The Recovery Act marks a major new chapter in this effort. Since 

its enactment, we have worked side by side with our partners at 

NTIA, as Assistant Secretary Strickling indicated, with our partners at the FCC, my former colleagues, and with the White House 

to fulfill the President’s vision for promoting broadband access 

across the Nation. The collaboration between RUS and NTIA has 

been unprecedented. Our departments have traditionally performed 

very different roles but I have been thrilled to join forces with 

someone of Secretary Strickling’s caliber as well as his talented 

staff to bring broadband across the United States. 

As Mr. Strickling indicated, we have received an overwhelming 

demand for funding. The volume of applications demonstrates very 

clearly the still unmet need for broadband in rural America. RUS 

received nearly $18 billion in requests for $2.4 billion in funding 

in this round, and applications came from a wide array of partners 

including State and local tribal governments, nonprofits, industry 

and public sector organizations in all 50 States and all territories. 


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We are now evaluating them and we expect to begin awarding 

grants in November. We estimate that the $2.5 billion in budget 

authority entrusted to the RUS could translate into as much as $7 

to $9 billion in grants, loans and loan-grant combinations to applicants. The first NOFA made available $2.4 billion of this total. This 

leaves around three-quarters of the total funds left for subsequent 

rounds. So any potential applicant that as unsuccessful in the first 

round or missed the opportunity to apply will still have ample opportunity to compete. As we did with the first NOFA, we ran intensive outreach efforts to open this process to as many potential applicants as possible. 

We will take what we learned in the first round, and your concerns, as many of you have articulated them today, to heart in developing our next round of funding. We are aware of the concerns 

that many of you and others have raised regarding a wide range 

of issues. These include the definition of rural and remote areas, 

eligibility standards for unserved and underserved areas, scoring 

weights for various factors and concerns regarding satellite service. 

Without speculating about specific changes, we will be guided by 

your counsel and of course by the evaluation of the experience and 

the feedback from the first round of projects. We are prepared to 

make changes accordingly. This is a thoroughly collaborative process with our partners at NTIA. We will avoid duplication. It will 

exploit the synergies between NTIA, which is running a grant program, and the loan and grant authority available to the RUS. We 

are committed to very careful stewardship of taxpayers’ dollars. We 

will make this process as transparent and as efficient as possible. 

In fact, yesterday we posted on the Web all of the applications in 

a searchable database. I see that Congressman Stupak has already 

looked at it and seen how many he has in his district, and I encourage all of you to look at that. You will be able o see exactly what 

has been proposed in your districts. There is a man right there 

Congressman Terry has. We plan to post maps of their service 

areas very shortly. 

So on behalf of all of us at USDA, we thank you again for your 

support for this critical mission. Your work has made possible this 

historic opportunity to restore economic prosperity and improve the 

quality of life in rural America. It is an honor to work with you on 

behalf of the 65 million Americans who live in our rural communities. I would be happy to answer any questions that you have. 

[The prepared statement of Mr. Adelstein follows:] 


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Mr. BOUCHER. Thank you, Mr. Adelstein, and thanks to both witnesses for your fine presentations here this morning. 

You heard my concerns expressed in my opening statement about 

the definition of remote, and I was pleased to hear you, Mr. 

Adelstein, say that that is one of the things that may be reconsidered with regard to the standards for the second round. Let me get 

you to elaborate just a bit on whether or not you share the concern 

that I have expressed. There are areas that are truly isolated that 

could be fairly close to a city. I saw a map yesterday that shows 

that virtually the entire eastern United States is disqualified from 

your highest level of grant, which is 80 percent to 100 percent, by 

virtue of the remote requirement, and any area that is within 50 

miles of a city of at least 20,000 population is considered non-remote and therefore not qualified. This is the map. I don’t know if 

you can see it. It is fairly small but as you can see, these dark 

areas around the eastern United States are the unqualified areas 

based upon your definition of remote. There are some places in the 

West that are qualified, but in the East, not, and in the Appalachian region we have these very small pockets of communities 

that are in mountainous areas that could be within 5 or 10 miles 

of a city but be for all practical purposes inaccessible. It is difficult 

to build the fiber links or wireless facilities that can serve such a 

community, very expensive, and if you have got 100 homes, the 

revenues that would be derived from a service that expensive serving that small a population would not be sufficient to repay a loan 

or perhaps encourage a private sector partner to apply for a grant 

that could only be 50 percent of project cost, and yet that is the 

maximum grant to which under your rules such a community 

would be eligible. 

So that is the concern broadly stated, and I would just welcome 

your response, either of you. Mr. Adelstein, it is more in your territory, so let me start with you. 

Mr. ADELSTEIN. Well, I certainly understand your concern. All of 

these issues are under consideration as we review the results of the 

first NOFA. We are going to go out for comments shortly in October and we will make a decision based on our experience of the current applications in the round of data that we are getting from 

that. The RUS in the past has been criticized for being too urban, 

for going too close to urban areas with our funds, and we want to 

restore our mission to being as rural as possible, to go into remote 

areas, and that was the impetus behind really forcing the largest 

amount of grant funds into the most remote parts of the country. 

We set aside $400 million for remote grants and saw a huge demand. Some people thought that there wouldn’t be interest because 

of the narrow number of areas that are eligible—— 

Mr. BOUCHER. But let just ask you if there was a geographic 

weighting with regard to where those applications came from. I will 

bet most of them came from the western United States, didn’t 

they? 

Mr. ADELSTEIN. I can do an evaluation and supply that for the 

committee. 

Mr. BOUCHER. Well, it would be interesting to see the geographic 

breakdown of where that came from. Well, I hear you say you unVerDate Mar 15 2010 10:47 Aug 16, 2012 Jkt 074095 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 E:\HR\OC\A095.XXX A095

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derstand the concern we have expressed and that you are willing 

to consider it. Let me move on to some other issues. 

Mr. Strickling, I would like to get your further elaboration on the 

concerns we have just had expressed to us, at least by my State 

of Virginia, perhaps some other States, that unexpectedly they 

have now received your basket of applications whereas in the past 

they have been given to understand that you were going to do the 

prescreening and that only maybe the final applicants would be 

sent to them for their comments, and they feel unprepared from a 

resource standpoint to review the entire basket of applicants. So 

what is your response to that? Why did that happen? And what is 

it you are looking for from these States? 

Mr. STRICKLING. Thank you. Let me start with the second part 

of your question because I think the burden on the States is not 

as great as perhaps they fear it is. What we are looking for from 

them is their sense of prioritization of the applications they have 

seen. We are specifically interested in understanding what areas of 

their States they believe are the ones in greatest need where we 

should look the most closest at applications. We are not asking 

them to review the applications the way we are going to look at 

them at NTIA to the extent of is it a viable project, is it a sustainable project. They are welcome to do that. That is not what we are 

asking them to do. In terms of what they have been given, they 

have been given obviously the same public access to the searchable 

database that everyone has. In addition, they will have access to 

the executive summaries, which is about a 5-page description of 

each project. That will be available to them, we hope starting next 

week. Beyond that, if they want more information from the applications, we will facilitate getting them more information but we are 

not sending them the full applications for their review. 

Mr. BOUCHER. Well, let me ask this. You in the end are going 

to retain final decision making with regard to all of these applications, are you not? 

Mr. STRICKLING. Absolutely. 

Mr. BOUCHER. And so you are looking to the States for comments 

and you will consider those comments along with other matters in 

order to make those final decisions? 

Mr. STRICKLING. That is correct. 

Mr. BOUCHER. One additional question that I want to ask of you. 

You have said that you will be reviewing applications that are directed to both agencies where that box is checked on the application saying that it is to be considered by both agencies. You will 

be reviewing those applications simultaneously—— 

Mr. STRICKLING. Yes. 

Mr. BOUCHER [continuing]. With RUS reviewing those applications? 

Mr. STRICKLING. Yes. 

Mr. BOUCHER. And you will not be waiting until RUS makes a 

decision with regard to whether or not that application is qualified 

before you start your review so it would not have to be rejected 

first at RUS before you begin to review it. Is that correct? 

Mr. STRICKLING. That’s correct, but we—— 

Mr. BOUCHER. So here is my follow-up question. While I understand that answer, as a practical matter, let us suppose that in the 


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funding cycle RUS doesn’t get around to really rejecting that application until fairly late in the cycle. Now, in theory, at least, it will 

have been reviewed in your office already, but by then you well 

may have made your prioritization of the applications you intend 

to fund. So would that application with the rejection from RUS 

coming so late in the process potentially mean that that application 

still as a practical matter would be considered on equal footing 

with the applications that were primarily directed to you? 

Mr. STRICKLING. Yes, sir, I think we will be able to handle that. 

We will obviously be in coordination and in contact with RUS 

through the review process, so I would hope to avoid the situation 

where there is a last-minute rejection on their part of a grant that 

we would like to fund if we know they are not going to fund it, and 

I think that through the coordination we expect to have, we should 

be able to avoid that problem. 

Mr. BOUCHER. So as I interpret your answer, you would be 

prioritizing all of the applications you receive whether they are directed solely to you or directed both to you and RUS at the same 

time and you would not be preparing one priority list just of the 

applications directed to you. Any application you receive, whether 

only to you or to you and RUS, would be eligible for that initial 

priority list so that if the rejection comes late, that application 

would in fact still be on equal footing with those directed just to 

you. Is that correct? 

Mr. STRICKLING. Yes, sir. 

Mr. BOUCHER. All right. Thank you, Mr. Strickling. 

My time is expired. The gentleman from Florida, Mr. Stearns, is 

recognized for 5 minutes. 

Mr. STEARNS. Thank you, Mr. Chairman. Just to review, the 

stimulus package had $7.2 billion of which $4.7 the NTIA is going 

to spend and the RUS is going to spend $2.5 billion. Now, it is my 

understanding that the bill indicates that you have to spend all of 

this by September of next year. Is that roughly your understanding, both of you? 

Mr. STRICKLING. Yes. 

Mr. ADELSTEIN. Yes, sir. 

Mr. STEARNS. Now, when you set the criteria to determine who 

is going to get awarded this, are you going to also put this on the 

webpage so that the applicants have an understanding when they 

compete with others what is the criteria, what is the minimum acceptable requirements for proposed projects? Mr. Strickling, you 

start first. 

Mr. STRICKLING. Congressman Stearns, I would suggest that that 

has already been provided to the applicants in—— 

Mr. STEARNS. Is that on the Web site? 

Mr. STRICKLING. On the Notice of Funds Availability issued in 

July, which is on the Web site, as well as guidance to applicants, 

which was a separate set of materials, as well as through our workshops. We have taken folks through all of the criteria for the 

project, most of which are drawn directly from the legislation, so 

folks should have a clear understanding of that. We also expect 

that as awards are made later this fall, that they will also provide 

a lot of guidance to applicants in terms of seeing what it takes to 


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be a successful applicant and people will be able to match up 

against the winning grants. 

Mr. STEARNS. So they will know if they didn’t get awarded and 

someone else did, they will be able to determine the reason why 

they didn’t get awarded? 

Mr. STRICKLING. That is right, and they will have the examples 

of the ones that did get awards to see, because those applications 

will be posted. A lot of information will be made available on those 

so people can learn from those if they want to come back in the 

second round and reapply. 

Mr. STEARNS. Mr. Adelstein? 

Mr. ADELSTEIN. Yes, that is right. I agree with that analysis, and 

we are going to post information about the winning applicants and 

how they scored on—— 

Mr. STEARNS. And that will be on the web page, of your web 

page? 

Mr. ADELSTEIN. We will put that on the web page. The applications are up now so people can see a project description but we are 

going to put much more data up as we go through the process. 

Mr. STEARNS. Let me ask each of you, will the actual score that 

you come up with be on the web page so the person can see how 

they are scored and how the people who won are scored? 

Mr. STRICKLING. We will not post the scores. In our view, this 

first round is to determine a finalist pool, all of whom we would 

say would be worthy projects of funding. 

Mr. STEARNS. Do you agree with that too, that you are not going 

to post the scores? 

Mr. ADELSTEIN. We haven’t determined that yet. 

Mr. STEARNS. Because I think as much transparency that you 

have here, the better, so we don’t look into, you know, people complaining that it is either politically or it is done for reasons they 

are not clear about. 

Now, is it possible that a lot of people who apply will be subpar? 

I mean, are you under the obligation that you have to spend all 

this money by next September? Is it possible you could say by 

golly, you know, 20 or 30 percent of these applicants are not qualified; if we give them the money, they can’t make the project go, or 

two, they are going to need to come back for more money. 

Mr. STRICKLING. The measure of success of this program in my 

mind is how many of these projects are still operating 5 years from 

now. 

Mr. STEARNS. That is good. 

Mr. STRICKLING. They need to be sustainable. We will not fund 

a project unless we have a high confidence level that it is a sustainable project that will deliver lasting benefits. 

Mr. STEARNS. Would you agree then this morning that if you 

don’t find qualified people you won’t spend the money and you will 

give it back to the taxpayers? 

Mr. STRICKLING. As a theoretical matter, I agree with that, but I would also say we have received $28 billion in requests. I am reasonably confident without having looked at a single application we 

have got a lot of high-quality applicants in front of us. 

Mr. STEARNS. Mr. Adelstein, is that how you feel too, that you 

will give the money back if there are subpar applicants? 


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Mr. ADELSTEIN. Absolutely. If we don’t get qualified applicants 

for all of the funds, we will not use those funds and we will return 

those to the Treasury. I think we have long experience in carefully 

evaluating these projects to ensure they are feasible, and one of the 

scoring criteria we have is the feasibility of it, and we have spent 

years with a less than 1 percent default rate in our telecommunications programs—— 

Mr. STEARNS. That is a good point. 

Mr. ADELSTEIN [continuing]. Ensuring that we do not—— 

Mr. STEARNS. Now, Mr. Adelstein, you had indicated when I 

talked to you yesterday that you have a leverage of 14 to one for 

$500 million that you are going to take off the top. Do you have 

also a plan of any leverage here that you are using? 

Mr. ADELSTEIN. No, sir. Under the legislation, RUS has a preexisting ability to make loans. All of our projects will be funded as 

full grants. 

Mr. STEARNS. Mr. Boucher talked about and showed this map 

here, and you heard from my opening statement a concern that the 

fact that the mapping is not done. I think only 10 States have completed it and 10 more in the process and that the FCC has in place 

a broadband policy and none of this will be made available to you 

before, Mr. Strickling you talked about in early December that you 

will have already spent $1.6 billion, I think you said. Is that correct? 

Mr. STRICKLING. By the end of the year, we—— 

Mr. STEARNS. So does that concern you at all that, you know, the 

actual mapping of this for the underserved and the people that 

have never been served is not even available so that you can make 

a decision? 

Mr. STRICKLING. I am not sure that is fully accurate, Congressman. 

Mr. STEARNS. OK. I would appreciate if you would tell me. 

Mr. STRICKLING [continuing]. Be to award a grant in an area if 

I didn’t know it was unserved or—— 

Mr. STEARNS. Well, how will you know if it has not been mapped 

for you? 

Mr. STRICKLING. Well, one way we will know if there is credible 

information from a previous State mapping effort, and as a practical matter, if such a map does exist and if the information on it 

is good, those applications will get additional consideration simply 

by that fact. However, we have asked all the applicants to provide 

that information for their areas as well and we will be evaluating 

that for its credibility and veracity, and if there is good information 

coming from the applicants which will be subject to a public review, 

then we feel we can rely on that information in determining whether an area is unserved or not. 

Mr. STEARNS. Would it be safe to say that those States that have 

mapped that to use those as a priority? Will you take into account 

that some maps have already been made for 10 States and use that 

as a priority in your decision process? 

Mr. STRICKLING. It receives additional consideration. I don’t 

know enough to say it is a priority. 

Mr. STEARNS. Mr. Adelstein, what would you say? 


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Mr. ADELSTEIN. I think it is very valuable information. I know 

that Commissioner Chong testified before your committee that it 

was very helpful in California to have the map first, and I think 

it would be helpful here. Of course, the purpose of this project 

being stimulus in some sense, we are moving ahead, but the mapping that we are putting up on the Web as soon as today or tomorrow is going to allow anybody in the public to take a look at the 

service areas being proposed for our project and challenge that, say 

that in fact there is service in an area where somebody says there 

isn’t and that will be a great way for us to evaluate that particular 

application in terms of whether that area is served or underserved. 

Mr. STEARNS. Mr. Chairman, I just have one last question, and 

this is for Mr. Strickling. Your latest report indicates that you have 

roughly about $318 million in DTV money left over as of August 

19. Now, if you take and extrapolate the redemption rate, 55 percent redemption rate in the remaining months of this program, you 

could have as much as $380 million left over. My question to you 

is, are you intending and will you return this, and this is ironical 

in the fact that Mr. Barton and I had a DTV fix bill which would 

have avoided the need for this costly delay, knowing that you are 

giving almost $380 million back. So the question is, do you plan to 

give this money back? 

Mr. STRICKLING. As I understand it, Congressman, the money 

goes back. We don’t have the option under the current legislation 

to keep the money. 

Mr. STEARNS. And when will that come back? 

Mr. STRICKLING. As you know, there are still coupons outstanding. I think folks have until November to use those coupons 

if they haven’t already used them. Following that, we will be closing out the program so I can’t give you a direct date today as to 

when that program will be closed out and all the accounting will 

be done but I would hope it would be early next year. 

Mr. STEARNS. All right. Thank you, Mr. Chairman. 

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

The gentleman from Michigan, Mr. Stupak, is recognized for 5 

minutes. 

Mr. STUPAK. Thank you, Mr. Chairman. 

Mr. Adelstein, if I can ask you a few questions, and I want to 

know a little bit more about the funding because I think there is 

some confusion on how the RUS is releasing a total of $2.4 billion 

in its first round of funding but still has adequate resources available for the next round. It is my understanding that this is due to 

the loan-grant combination that you have authority over. Can you 

provide some clarification on that? 

Mr. ADELSTEIN. I would be happy to. Congress gave us the authority to provide loans and grant combination and loans so that 

allowed us to leverage our $2.5 billion in budget authority to $7 billion to $9 billion in loan-grant combinations or loans and grants. 

Many rural communities can be served this way. We can stretch 

the dollars that we have. Because of our sound track record at 

USDA, we have a 7.24 percent subsidy rate which means that we 

can take $72,000 and get $1 million worth of loans out of that 

amount of taxpayer dollars, which means that we can take $500 

million from the top of the $2.5 billion, have $2 billion left over for 


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grants and do $7 billion in loans with that amount. So even though 

we are taking $2.4 billion in this case, the $2.4 billion is of that 

total $7 to $9 billion. It is not of the $2.5 billion. This includes the 

loan amount, which is highly leveraged because of our good track 

record in getting repaid. 

Mr. STUPAK. Let me ask you this then, then underneath the stimulus package where you received this money, the $2.5 billion, 

how much more in loans is the RUS issuing than the agency would 

normally do under normal fiscal year under the RUS program? 

Mr. ADELSTEIN. This is a much greater amount of loans than we 

have ever done in a single year by a large factor. I mean, we can 

do—in total we do quite a few. We can do $1 billion in telecommunications loans but not broadband loans. We have never 

done that. We have done $1.1 billion in broadband loans since 2002 

and now we are going to be doing $7 billion in one year, so it is 

a huge ramp-up of what we have done in the past. 

Mr. STUPAK. Well, you mentioned ramp-up, and putting on my 

oversight and investigations hat, with that much more money then, 

are you going to have to be bringing on more staff? And I heard 

some concerns from Mr. Stearns and others about the quality of the 

loans. In order to make sure you can monitor these grants and 

loans in this program, obviously you are going to have to bring on 

more staff. 

Mr. ADELSTEIN. We are in fact. We have 114 people now that do 

telecommunications projects but we are going to add 50 temporary 

employees under funding from the stimulus act. We also have 470 

field offices across the country and we are drafting people from all 

those field offices to help us including expert, what we call general 

field representatives. We have hired an outside contractor to assist 

in reviewing the first round of applications according to objective 

scoring criteria. Working closely with them, we are ultimately 

going to make the decisions based on their assistance. In addition, 

we have 60 years of experience in doing electric and water and 

telecom, so we are an experienced agency. We are just doing a 

large volume in short order. 

Mr. STUPAK. Well, let me ask you this. Stimulus funding basically runs out about September of 2010, but the loans in that won’t 

be repaid, so you are still going to need staff and monitoring of 

these loans to make sure they are repaid well after the stimulus 

package is basically over, correct? 

Mr. ADELSTEIN. We absolutely will. It is very important that we 

continue to monitor these loans to ensure—and the grants to ensure that they are achieving the purpose for which they were intended. We do a very good job now with our field offices of following 

up on the loans that we have with the larger portfolio that we are 

going to rapidly develop through this. We are exploring our options 

for ensuring continued oversight after the funding expires. 

Mr. STUPAK. Mr. Strickling, same with your agency. Are you 

going to be having more people on to monitor and even after 2010 

to still look at your loans and portfolios? 

Mr. STRICKLING. That is correct, and we are in I think a slightly 

different situation perhaps than RUS because they have an existing program. Our program was created by the Recovery Act and 

the authorization for it ends September of 2010, so yes, we will 


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need both authorization and hopefully some appropriations to be 

able to carry out our oversight responsibilities after all these grants 

are awarded next summer. 

Mr. STUPAK. Well, Mr. Strickling, let me ask you this. It is also 

my understanding the Broadband Technology Opportunities Program gives weight to projects that can commence immediately upon 

receiving these funds. One of the concerns that I have, being from 

northern Michigan, if we are not going to make our grants until 

about November, November where I am at, the snow is flying by 

then. It would be hard for us to immediately start. It would probably be about April or May before we can really get in there because if you try to do this in the winter, it will just increase your 

costs tremendously. Will that be weighed somehow so we are not 

having problems with getting this November round because we 

can’t start the actual infrastructure until the spring? 

Mr. STRICKLING. That is correct. Shovel-ready is our evaluation 

of the project. It is not whether you are shovel-ready in the winter. 

In fact, you may have a shovel-ready project in the general scheme 

of things but we are certainly not going to penalize applicants because we are happening to be awarding the money in November 

and someone might say well, we can’t actually turn when it is 

under 6 feet of snow. 

Mr. STUPAK. Let me ask you this. With my law enforcement 

background and all that, and in the stimulus—I am sorry, Mr. 

Chairman. I will follow up in writing. I have questions on public 

safety and a reluctant feeling that they don’t have the expertise to 

apply. How do we make sure law enforcement and the value 

broadband can provide to them. I will follow up later. Thanks. 

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

The gentleman from Texas, Mr. Barton, is recognized for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. I just have three questions. I will try to be very quick because I see we have some votes. 

My first one is tongue in cheek, but there is a program for people 

like me who didn’t get a coupon? Have we just missed the boat or 

is there some—you know, if you are really, really stupid and really, 

really lazy we will give you one more chance program? 

Mr. STRICKLING. No, sir. 

Mr. BARTON. It is gone, huh? 

Mr. STRICKLING. You are out of luck. 

Mr. BARTON. All right. Well, I was afraid that was going to be 

the answer. That is the right answer, by the way. It should be that 

way. 

Next question is about the Universal Service Fund. I don’t think 

it is any secret to you two gentlemen that I am not a big fan of 

that program, and I am working with Mr. Boucher and others, Mr. 

Markey, to come up with a reform program for it. But in terms of 

this program that you two gentlemen are implementing, can we be 

assured that you are only going to award funds to projects that will 

be sustainable without additional federal funds in the future? 

Mr. STRICKLING. Yes, sir. I think our philosophy will be that 

there will not be any additional federal dollars available for these 

projects beyond what is in front of us in the $4.7 billion we have 

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ability past the grant period and we are not going to assume oh, 

yes, they will get Universal Service money or that some other grant 

program will rescue this project. It is got to be sustainable once our 

monies end. 

Mr. BARTON. Mr. Adelstein, do you share that view? 

Mr. ADELSTEIN. Absolutely. Our scoring criteria count project 

sustainability and project viability among the highest categories for 

awarding funds. We generally look very closely at the balance 

sheets and at the financial spreadsheets of these companies with 

our experience as basically a lender. With a $54 billion loan portfolio, we are very experienced at evaluating the financial capability 

of companies and their sustainability. Particularly when it comes 

to the loan component, we want to make sure we get paid back. 

Mr. BARTON. Last question. I see some conflicts or potential conflicts of interest in the administration of the grant program that 

Mr. Strickling is implementing. The statute directs that the NTIA 

consult with the States about which applications to grant but the 

States themselves are eligible for these grants. Secondly, you are 

going to be soliciting volunteers to evaluate the grants but your 

volunteers might also be involved with the industries that would 

benefit from receiving the grants. Mr. Secretary, what mechanisms 

are you putting in place to try to prevent such conflicts of interest 

in these two areas? 

Mr. STRICKLING. Yes, sir. With respect to the States, the statute 

specifies that the States should have this role, so I think if it is 

a conflict, it is a conflict everybody can see, everybody can evaluate, 

and we will act accordingly. With respect to the reviewers, we have 

very strict conflict-of-interest policies, and in fact we have already 

rejected about 10 percent of the experts who have come forward to 

offer their services on either lack of expertise or because they have 

a conflict due to their employer, but basically if you work for a company that is making a grant application of its own, you will not be 

allowed to review any application in any State in which your employer’s application might apply and certainly you won’t be able to 

review your employer’s application. If you work for a broadband 

service provider, you will not—whether or not that company has 

filed an application, you will not be allowed to review an application in any State in which your employer offers service. So we feel 

that we can still take advantage of the expertise of folks but we 

are going to sequester them away from any application where they 

would be any actual or apparent conflict of interest. 

Mr. BARTON. Thank you, Mr. Chairman. 

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

We now have three votes pending on the floor of the House, and 

that will probably require at least a half-hour in order to accomplish so I am going to recess the subcommittee and we will return 

to continue our questions with you as soon as this roll call is finished. 

[Recess.] 

Mr. BOUCHER. We will reconvene, and I want to thank Mr. 

Strickling and Mr. Adelstein for their patience as we finished our 

business on the floor of the House for the day. 

The gentlelady from California is next to propound her questions, 

and she is recognized for 5 minutes, Ms. Matsui. 


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Ms. MATSUI. Thank you, Mr. Chairman. 

To ensure that more Americans will have access to broadband 

Internet service, we have to address not only the populations who 

don’t have access to broadband but those who have access but are 

not able to afford such services. In California, an estimated 96 percent of California residences have access to broadband but the 

problem is adoption since barely more than half of Californians 

have adopted broadband at home. In most cases, adoption rates are 

associated with income as seen in the recent data from the Public 

Policy Institute of California. We show that only 58 percent of Californians earning under $40,000 a year subscribe to broadband at 

home but 97 percent of those earning $80,000 or more subscribe to 

this. And so it is clear that millions of Americans cannot afford either a computer or Internet services. In April, I along with six of 

my colleagues who serve on this subcommittee wrote urging the 

FCC, NTIA and RUS to consider low-income populations to be part 

of the definition of underserved as it applied to broadband grant 

programs. To fully close the digital divide, we must address the affordability of broadband for lower income families. Although these 

families may have different options for broadband access, in my 

opinion, they are underserved if none of these options are affordable. 

Mr. Strickling, during your rulemaking process, how much of a 

factor did you consider income and affordability in the definition of 

underserved? 

Mr. STRICKLING. As you know, the definition we ultimately 

adopted did not include that as a test but we absolutely were 

thinking about it, and our final judgment was that using an adoption rate really got at the issue and might be explained—in other 

words, we have a rate that says if an area is showing less than 40 

percent adoption, it is underserved. We feel there may be any number of explanations for that including the factors you described but 

we chose to go right to the heart of the issue which was the adoption rate and make that the standard in the definition, and I will 

point out that among the 2,200 applications we received, we do 

have a separate part of our program that is focused on sustainable 

adoption projects. We received over 320 applications from entities 

that want to perform these sorts of sustainable adoption projects 

and they have asked for about $2.5 billion, so it is an area that we 

view very seriously. We absolutely agree with you that looking at 

the demand side of this equation is just as important as looking at 

the supply side, and we need to understand why folks aren’t able 

to adopt these services and we are going to have an opportunity 

now with the monies available in the Recovery Act to fund a number of different approaches to increasing those adoption rates. 

Ms. MATSUI. I certainly do appreciate that because that is going 

to be a very important factor in moving forward. 

I would like to also say that many households in underserved 

urban communities either don’t have a computer or cannot afford 

Internet service, and now they rely on local schools and libraries 

for their broadband services, and especially in these tough economic times, more and more people are relying on the computers 

at their libraries for a job, employment services, managing their finances even because they can’t afford Internet service, so I think 


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it is critically important that the schools and libraries serving underserved communities be properly considered during the grant 

process. So Mr. Strickling, how are you handling applications for 

schools and libraries in urban underserved areas? 

Mr. STRICKLING. Again, we are very interested in receiving those 

applications because, as you have just pointed out, if folks don’t 

have a computer in their own home, the ability to go to a local library or go to a local school after hours to get access to the Internet on a broadband service offered in those institutions is perhaps 

their only ability to go online. So we understand the importance of 

it. In our scoring criteria, the presence in a project application 

of—— 

Ms. MATSUI. Mr. Strickling, do you have standards that apply to 

this? 

Mr. STRICKLING. I was about to say that we will be giving additional consideration to those projects that come to us that are able 

to incorporate working with these community anchor institutions 

as part of the overall project design. 

Ms. MATSUI. I would like to follow up with that later on too if 

that is possible. 

Mr. STRICKLING. Absolutely. 

Ms. MATSUI. I see I am running out of time, so thank you very 

much. 

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

The gentleman from Oregon, Mr. Walden, is recognized for 5 

minutes. 

Mr. WALDEN. Thank you, Mr. Chairman, and I am sorry I 

couldn’t be with you earlier this morning. I had conflicting duties 

that I had to attend to. 

First, I would like to ask that my opening statement be inserted 

into the record at the correct place. 

[The prepared statement of Mr. Walden appears at the conclusion of the hearing.] 

Mr. BOUCHER. Without objection. 

Mr. WALDEN. I have questions for both of our witnesses. I am 

troubled that out in the State of Oregon that the two largest providers of telecommunications in my district cover about 80 percent 

of the territory, Qwest and Century Link. Both have chosen not to 

apply for grants and they cited uncertainty of the consequences of 

accepting grant money, issues about ill-defined network, non-discrimination requirements, prohibition of sales of facilities, how all 

that works, the cumbersome application process. How will constituents in a district that is vast and underserved as mine benefit from 

the broadband stimulus grant program if the rules and regulations 

of the program scare away the big providers, the big folks who can 

participate and frankly the only ones that are poised to participate 

in a district like mine? Are you finding this elsewhere around the 

country? 

Mr. STRICKLING. Well, the first comment I would make is, 2,200 

applications were filed seeking $28 billion of funding. When we 

issued our Notice of Funds Availability, we heard from all manner 

of folks that the criteria were too strict, that the rules were too confusing, yet 2,200 people were able to submit applications who navigated their way through the process. 


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Mr. WALDEN. Do you have a breakout by State or district? 

Mr. ADELSTEIN. I do. Your district has 14 applications in it, so 

there were 14 applicants in your district, two in Oregon that were 

able to—— 

Mr. WALDEN. Right. I know Bend Broadband, I believe, is one. 

Mr. ADELSTEIN. And that is just for our program. There may be 

some additional ones for BTOP as well. 

Mr. WALDEN. Could I get that list at some point? 

Mr. ADELSTEIN. Absolutely. I will get to that you immediately. 

Mr. WALDEN. One of the issues I raised when this was going 

through is how the process, the timing would work. I had concerns 

that, you know, and I know are going to have three tranches of 

money that goes out, because the mapping in Oregon, rough maps 

will be available in November. The complete won’t be ready until 

February so in the first round you don’t really know, you don’t 

have the mapping done. 

Mr. STRICKLING. The national broadband map has a deadline of 

February 2011. 

Mr. WALDEN. Right. But in the State of Oregon, for example, the 

first round—we will be done with our mapping by February of 

2010, so that will work in the second round, correct? 

Mr. STRICKLING. Yes, but again, I don’t think the presence of a 

State map is a magic bullet here. We want to be awarding grants, 

the infrastructure grants in the unserved and underserved areas, 

we want to be confident that they are that. A map helps us make 

that judgment if it has credible data that went into it but there are 

other ways to get that information as well. Each applicant was required to supply that sort of information, and if they have given 

us credible data we will rely on that in making grants. 

Mr. WALDEN. So how was the definition of remote and rural that 

is used in the application developed? My understanding is the only 

remote rural areas are eligible for 100 percent funding from RUS. 

RUS defines an unserved area as remote rural if it is at least 50 

miles from a non-rural area, and yet I am hearing from some that 

the projects may not be able to meet this criteria, that few, if any, 

will meet this criteria. 

Mr. ADELSTEIN. We actually set aside $400 million under that category and we received $3.8 billion in loan requests for that $400 

million, so we are well oversubscribed 10 to one so a number of applicants did find that they were in areas that were remote. Now, 

we haven’t verified that in fact they were in remote areas but we 

have an overwhelming demand for that category. The RUS really 

wants to serve the hardest to reach, more rural areas of the United 

States and that was our goal. The previous Administration was 

criticized for moving some RUS into areas that were too suburban 

or too close to urban areas and we tried to push it out, but I certainly understand concerns about that and we are looking at that, 

but there is a lot of interest in those as well as people applying for 

the loan-grant combinations. 

Mr. WALDEN. So help me on this definition. If you define an 

unserved area as remote rural if it is at least 50 miles from a nonrural area, how are those terms defined? What is a non-rural area? 

Mr. ADELSTEIN. A non-rural area is defined as not being urban, 

and an urban area is defined as an area that is either 20,000 peoVerDate Mar 15 2010 10:47 Aug 16, 2012 Jkt 074095 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 E:\HR\OC\A095.XXX A095

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ple or an urbanized area contiguous to a city or town of 50,000 or 

more, so you have to be 50 miles from the limit of those two areas. 

Mr. WALDEN. I have just one other question that I wanted to ask. 

I believe that the stimulus funding should of course go first to 

those that aren’t served, and you were here as a commissioner. I 

mean, you understand that debate, that sometimes this money goes 

out and has in the past to areas that have multiple services. And 

I think it ought to go to individuals, businesses, institutions that 

don’t have access to broadband at all rather than better service to 

those who do. Is that the prioritization NTIA is going to use? 

Mr. STRICKLING. Well, under the statute we are going to focus on 

unserved and underserved areas, and bear in mind, an underserved area is an area that may only have 50 percent or fewer of 

their residents available to sign up for service. So there is a large 

body of people in an underserved area that they themselves individually are unserved, so I think that in making our grants we are 

going to be cognizant of both of those sets of issues, both the 

unserved and the underserved, which will contain many unserved 

people. 

Mr. WALDEN. All right. Well, let me be the one that weighs in 

on, for the limited amount of government resource we have, it 

ought to go to those who don’t have access to any service first. That 

is my own opinion, and I know my time has expired. 

Mr. Chairman, a unanimous consent request that the written 

statement of Mr. Blunt be included in the hearing. 

[The information was unavailable at the time of printing.] 

Mr. BOUCHER. Without objection. Thank you very much, Mr. 

Walden. 

The gentlelady from California, Ms. Eshoo, is recognized for 5 

minutes. 

Ms. ESHOO. Thank you, Mr. Chairman, and thank you to our witnesses again and for your patience in waiting for us while we completed our work on the floor for today. 

I have some questions and I just want to put my questions out 

and then have you respond to them. I want to go back to my opening statement and just reemphasize—it is not a question, just to 

set it down again, that when this charge of the Congress to you to 

implement has been completed, that when not only look at the map 

and see the work you have done in underserved and unserved 

areas, that the broadband will be really at the highest level in 

terms of speed, and that is really a top priority for me and I think 

that those communities deserve that and it is going to be in your 

hands to help to see that that happens. 

Now, you are in the first round, and whether you are just going 

to do a second round and not have to do a third, I mean, obviously 

that is going to be up to you, but in the first round of applications, 

how many included requests for waivers of information? The reason 

that I ask that is, because it is my understanding that there were 

applicants who claimed that they were unable to apply due to software issues and problems, you know, not being resolved before the 

deadline. So I would like to know, my first question is, what steps 

you are taking to ensure that the process runs smoother in the 

next round? And I would also like to know more about the process 

whereby incumbents can challenge applications that seek to serve 


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underserved areas. Now, in the BTOP and the BIP, the notice of 

available funding, it provides for existing service providers an opportunity to challenge and demonstrate that a project is not 

unserved or underserved. What I want to make sure of is that 

there is competition, and if the incumbents can just knock out people because they don’t want any competition to come in, I don’t 

really think that is the way for us to go. So does this mean that 

an applicant will have to provide proprietary information? That is 

why I was asking the question about requests for waivers. That I 

think would undercut their ability to compete, and other than the 

most obvious cases where there is competition, what is the criteria 

for deciding? How do you weigh in on this and what is the administrative process in place for challenges and counterchallenges and 

fact finding? 

So you can tell what my questions are, and I also would like to 

add a comment to reinforce what Congresswoman Matsui raised 

about anchor institutions. I think it is a very important one, and 

the two of us are going to follow up with you with some more questions in writing, but I think that these anchor institutions bear 

that designation in our communities because they really are anchors. That is where people go when they don’t have these tools at 

home or can’t afford them. So anyway, those are my questions. I 

don’t know who wants to take them on. 

Mr. STRICKLING. Let me take each of your issues up. First, the 

speed question. The eligibility requirements to apply set the 768 

kilobits per second as a threshold to make you eligible to apply. I 

would be very surprised—most of these applications are proposing 

substantially faster speeds, and if one has proposed a faster speed, 

and if one has proposed a faster speed, you get additional consideration in the scoring of your application. 

Ms. ESHOO. Oh, good. So the scoring is weighted for the higher 

speeds? 

Mr. STRICKLING. That is correct. 

Ms. ESHOO. That is great. 

Mr. STRICKLING. What we didn’t want to do at the front end of 

the process was basically—there may be areas of this country 

where the only practical technology to be used is at roughly 768- 

kilobit-per-second speed. We didn’t want to basically determine at 

the front end of this that nobody could apply from those sorts of 

areas. We wanted to at least be able to consider them. And in fact 

3G wireless is the only option for a given area, we would like to 

at least be able to consider whether or not to fund it. But again, 

higher speeds get more votes and greater scores and should rise to 

the top of the review. 

In terms of the application processing, the 2 weeks when folks 

were rushing to put their applications through, it is correct that 

certain applicants experienced difficulties. But what I would urge 

you to consider is that during that period both of our agencies were 

in constant contact with each other and we were taking remedial 

measures to fix the problems as they arose, so in the first week it 

became apparent that because of the size of the attachments we 

were getting from many applicants, we didn’t have enough server 

capacity. The result was, we, I think, doubled or tripled the number of servers that were available to receive the information. It 


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later turned out that there was some sort of browser incompatibility. Some people using certain older browsers were running into 

some compatibility issues. We identified that as a problem, alerted 

the applicant pool that they ought to use a particular browser as 

a way to avoid that problem, and again we think that was fixed. 

We extended the deadline so anybody who had started an application by the original application date was given an extra, I think, 

6 days to get their full application in. During that 6 days, we had 

many days where people weren’t coming on the system, that there 

was plenty of capacity, plenty of opportunity yet we still ran into 

the natural human tendency to wait until the last minute, and people did that even though every day we were e-mailing the applicant 

pool saying there is nobody online, now is the time to get on and 

put your application in. At the last minute on the last day, there 

were still some people who apparently had some problems getting 

attachments uploaded, and on the last day we alerted those people 

and gave them the option of sending those attachments on a thumb 

drive or on a disc so that we could add them to the application. So 

I think the responses of RUS and NTIA during those 2 weeks 

showed a very strong emphasis on supporting the applicants as 

they were trying to get their way through the system. Both of our 

organizations are committed to doing an evaluation of our systems 

before we do the second round, and if there are improvements 

above and beyond the ones we made, we absolutely intend to make 

them. 

On your third point, because I want to give Jonathan a chance 

to weigh in as well, the incumbents do not have a veto here. As 

we have been discussing—— 

Ms. ESHOO. Can you describe the way it works? 

Mr. STRICKLING. I am sorry? 

Ms. ESHOO. Can you describe the way it works? 

Mr. STRICKLING. Yes. The applicants have indicated the areas 

that they believe are unserved or underserved as part of their application. That information will be going up on our database, and 

anyone, but in particular, service providers in those areas, will 

have an ability to say well, wait a second, we disagree with that, 

but if they are going to do that, they are going to have to provide 

a lot of information to us in order to overcome the presumption 

that will have been established by the applicant. Beyond that, that 

will then become an issue that if necessary we will have to evaluate, either at RUS or at NTIA, before we make a grant award, if 

something has been thrown in dispute, but we will have that decision. It won’t be made by any incumbent. They will not have the 

ability to veto another applicant from being able to offer service in 

their area. Jonathan, I don’t know if you want to add anything. 

Mr. ADELSTEIN. Well, as usual, since we are so coordinated, we 

agree with everything Mr. Strickling had to say. I would just say 

for purpose at RUS, speed does matter for us as well. We have additional points for higher speeds. The 768 is a floor. That was the 

FCC definition that Mr. Copps and I spent years trying to get up 

from 200. 

Ms. ESHOO. I know you did. You devoted several years of your 

life to that. 


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Mr. ADELSTEIN. We sure did, and we got it moved up, but we 

don’t want that to be the—that is the floor. We build from there, 

so there is rewards for higher speeds. In terms of the challenge 

process, Mr. Strickling is exactly right. We are going to demand 

real substantiation, but we also want to ensure that what the applicants are asserting is correct. This is an unprecedented transparency that we are going to conduct. We are going to put all those 

maps up on the web so anybody can look at them. The entire public 

is our other IG to make sure that people are being accurate about 

they are representing whether or not an area is unserved or underserved but the final determination is by RUS and NTIA. We are 

going to make that determination. All claims and challenges have 

to be verified and substantiated. We have field offices in every 

State in the country, many of them in California, 470 offices across 

the country, and we are planning on sending our general field representatives out to substantiate these things to actually find out 

what is happening in the communities. Our State directors have 

volunteered to help us as well to make sure that we really get an 

accurate picture of what is happening in those communities, and 

this can be a useful building block also of course for NTIA’s map 

that they are working on to give us real data about what is happening in those communities, but we are not going to let incumbents just knock people out willy-nilly. They are going to have to 

prove their case. But on the other hand, we welcome them to challenge and to get to the bottom-line truth as to what is happening 

in those areas to make sure that we are targeting our funds at 

areas that are truly underserved. 

Ms. ESHOO. Do you have the capacity to make those determinations with your staff? 

Mr. STRICKLING. It is going to be a challenge. I mean, we are 

having to basically take people that are normally doing other work 

and put them on to this job. But given what challenge Congress 

has put before us, we think that is a valuable re-prioritization of 

our staff and we are working with all of our staff to get them ready 

for that process. 

Mr. BOUCHER. Thank you, Ms. Eshoo. Your time has expired. 

Ms. ESHOO. Thank you, Mr. Chairman, and I thank our witnesses and I thank you for your patience. 

Mr. BOUCHER. The gentleman from Vermont, Mr. Welch, is recognized for 5 minutes. 

Mr. WELCH. Thank you, Mr. Chairman. One of the concerns I 

had, I think, Mr. Chairman, you brought up in your opening remarks, and that is, Vermont is a very rural State that sometimes 

under the standards isn’t considered rural, so I hope that the concerns expressed by the chairman I know having been expressed by 

the chairman will be taken quite seriously by you. Thank you for 

your testimony. 

Just a couple of questions. Broadband obviously is big everywhere including in Vermont but simply building the infrastructure 

doesn’t guarantee that people will use it, and one way to help increase the success rate of rural broadband projects is to improve 

the business case by increasing take rates, and there was a way, 

as I understand it, in the first round for someone to propose a combination of sustainable adoption and the infrastructure project, and 


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I am wondering whether the NTIA will consider this in the next 

rounds. 

Mr. STRICKLING. That is not entirely true. 

Mr. WELCH. Inform me. Thank you. 

Mr. STRICKLING. We actually encourage people to combine project 

purposes. Our systems require that they in effect submit two separate applications, and we are going to look for the second round, 

is there a way to solve the administrative issue but we absolutely 

encourage people to combine adoption thinking with an infrastructure project, and those projects will be considered in tandem as 

they go through the process. 

Mr. WELCH. Great. Thank you. In the second round, States like 

Vermont are going to be focused on filling out our remaining 

broadband service gaps. Those are likely to be found of course in 

smaller and more discontiguous pieces, and I am wondering what 

will NTIA do to help applicants qualify who are trying to turn what 

is essentially a Swiss cheese pattern of coverage into blocks of consistent, 100 percent coverage. 

Mr. STRICKLING. To the extent that we identify that as a problem 

after see the applications we have seen, because it may well be 

that folks have figured out ways to do that as we go through these 

applications and certainly if we get those sorts of learnings from 

the application pool we have, we will find a way to make those 

learnings available to the general pool, but if it is a continuing 

issue, we are going to look at how to continue to tweak and refine 

our outreach efforts for the second round to provide whatever guidance we can to people to help them navigate their way through 

those issues. 

Mr. WELCH. Last question. One problem we see in Vermont is 

that clusters of served households tend to be distributed among a 

number of different neighboring census blocks that also in those 

census blocks contain unserved households, and it is making it 

harder to define the unserved areas using census blocks as a measurement, and I am wondering whether NTIA will allow applicants 

a little bit more flexibility to define their service areas to better 

conform to essentially relate to the facts on the ground the boundaries of served and underserved areas. 

Mr. STRICKLING. I frankly would be surprised if that is really a 

problem for folks who understood the process because they could 

define their service area by linking together whatever census 

blocks they wanted to, and in terms of meeting our test, all they 

had to do was either meet the unserved test for the entire set of 

blocks or the underserved test, either one, and I would expect that 

folks who understood their neighborhoods and their service areas 

could create those sorts of service areas for the purposes of our 

projects that would have qualified as underserved or unserved. 

There was a misconception early on that you had to demonstrate 

that each census block in your application was either unserved or 

underserved and that is not correct. You had to define a service 

area as a grouping of census blocks and then we looked at that in 

the aggregate to say does that satisfy the unserved definition or 

does it satisfy the underserved definition, and again, I think, folks, 

again, gauging from the 2,200 applications we received found ways 

to define their services in a way to qualify. 


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Mr. WELCH. Thank you very much. I thank the witnesses and I 

thank the chairman, and Mr. Chairman, I yield back the balance 

of my time. 

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

The gentleman from Washington State, Mr. Inslee, is recognized 

for 5 minutes. 

Mr. INSLEE. Thank you, and I want to thank the chairman for 

holding this hearing and I look forward to discussing with the committee and Mr. Strickling our Spectrum Relocation Improvement 

Act, which we hope to move forward on that Mr. Upton and I have 

introduced and Ranking Member Stearns. 

I have a couple questions for Mr. Strickling. We heard from 

Washington State that the NTIA’s application review process has 

changed so that it would put the first round on the States, and 

could you confirm for us that it has not changed and that NTIA 

is still going to retain the original review process? 

Mr. STRICKLING. Yes, Congressman. I can confirm that that determination, I am not sure how it arose but it is not accurate in 

terms of what the role of the States will be. As we discussed earlier 

in the hearing, the States are being asked to provide us 

prioritizations if they wish to. They are not being asked to review 

applications. No decisions have been handed over to them. We retain the ultimate decision-making authority on those grants. The 

States will provide input to the process just as the legislation expects. 

Mr. INSLEE. I welcome your statement in that regard, and that 

would obviate the problems if we had 50 different sets of 

prioritization rules that could end up, so you don’t see that as 

being a problem? 

Mr. STRICKLING. No, sir. 

Mr. INSLEE. Thank you very much. 

Mr. BOUCHER. Thank you, Mr. Inslee. 

I am going to raise one additional concern with each of you that 

has come to my attention since my round of questions ended some 

time ago. 

Mr. STRICKLING. Breaking news. 

Mr. BOUCHER. And I want to come back to the fact that if you 

are a rural applicant, you basically have to apply through RUS. 

You can apply jointly to be considered by both agencies but your 

application has to be reviewed and acted on by RUS before NTIA 

has an opportunity to act on it. And the concern is this: that RUS 

could review the application and decide that it is not eligible for 

the 80 percent to 100 percent grant because, for example, it is a 

non-remote area, maybe one of these little pockets that is fairly 

close to a city, even if it is isolated, and would be deemed non-remote under that definition, which we hope to see changed, and if 

that were to happen, RUS might still find that that application 

could be eligible for a 50 percent grant or for some grant-loan combination whereas if NTIA had been looking at that application 

standing on its own, it could have been qualified for a grant of between 80 and 100 percent. So there is a barrier here that many applicants may face where under NTIA’s standard a grant of 80 percent to 100 percent could be provided but where under RUS the 

maximum grant is only 50 percent, and I would hope that at a 


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minimum as you consider modifying these standards for your next 

round, that you would enable applications to be acted upon based 

upon the higher level of funding that could be provided by either 

agency so that the barrier I have just identified would be removed. 

So I guess first let me ask you if I have properly interpreted the 

standards as they have been put forth, and secondly, if you would 

consider some change that would address the circumstances, assuming I have properly interpreted them. 

Mr. ADELSTEIN. That could be an issue. However, I would respond that if they can qualify for a grant-loan combination, that 

would be a wiser use of taxpayer dollars. We want to minimize the 

amount of grant so that we can maximize the amount of rural 

broadband infrastructure that we can leverage to get out to the 

consumers. So if in fact there is an application that would be viable 

that would be able to repay that 50 percent, we actually designed 

the system to encourage that. That is one of the reasons the system 

is designed the way it is with the RUS getting that first look at 

it so that we could try to stretch those taxpayer dollars as far as 

we possibly could. Obviously the point isn’t to maximize the 

amount of grant that a particular applicant gets but rather to give 

them the minimum amount they need in order to provide 

broadband and have a viable, sustainable business. 

Mr. BOUCHER. And let me just say, I don’t disagree with that. I 

think you are exactly right. To the extent that a full project as it 

is anticipated by the applicant and applied for can be built with 

something less than full grant, obviously it is optimal to do so. But 

in those instances where that can’t happen and you deem the 

project ineligible for the full grant but offer a 50 percent grant and 

a grant of a higher level could be provided by your sister agency, 

that might enable the full project to be built and built more rapidly 

or in a better way. It seems to me that that potential should be 

preserved, and under the existing regulation I think it is not. 

Mr. ADELSTEIN. It could be because a joint application, they could 

apply to us for 50 percent and apply to NTIA for 100 percent the 

way we designed the application system. So they would apply to us 

at 50 percent. If it wasn’t viable, and we are very good at doing 

the business analysis to determine whether or not that would be 

viable at that rate, we would then kick that to NTIA and say these 

people aren’t going to be able to repay that loan, this business case 

can’t be made but it is a very good project. That would then automatically be kicked over to NTIA which had simultaneously been 

reviewing the process, been reviewing that application—— 

Mr. BOUCHER. So you are saying that if your analysis determines 

that the full project for which the application is made can’t be built 

with something less than the higher level of grant, then that would 

be what the applicant receives, but it would be your determination 

that the full project can be built for that amount? 

Mr. ADELSTEIN. Right. If we determine that the full project can’t 

be sustained—— 

Mr. BOUCHER. And if you determine it cannot be, that the full 

project cannot be built for that amount, for the maximum amount 

for which under the application they are qualified, then NTIA could 

take it from there and potentially fund it at the higher level to 

fund the full project. Is that accurate? 


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Mr. ADELSTEIN. Exactly. 

Mr. STRICKLING. Yes, sir. 

Mr. BOUCHER. All right. Thank you. I appreciate your indulgence. Let me just quickly ask my staff a question. She says yes. 

All right. 

I want to thank you. You have been very patient today including 

sitting through a lengthy recess while we finished our business on 

the floor of the House, and I appreciate the thorough answers you 

have provided to all of our questions. As you could hear expressions 

on a bipartisan basis today, there is concern by members about the 

definition of remote, and I very much hope that you will address 

that before you put the NOFA out for the second round of funding. 

You have heard our other concerns and to the extent that you can 

consider and make modifications to accommodate those, that would 

be much appreciated as well. 

We will be having, as Mr. Stearns recommended, at least another 

hearing to oversee this program at some appropriate time yet to be 

determined, and we will welcome you back when that hearing occurs. Thank you for your testimony and your participation today, 

and this hearing stands adjourned. 

[Whereupon, at 1:00 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


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